• Finance Segment Net Income: $8.2 million for the fourth quarter.
• Capital Deployed: $44 million into yielding finance receivables.
• Non-GAAP Tangible Financing Book Value Per Share: Increased 8% year over year to $21.15.
• Share Repurchase: Approximately 100,000 shares repurchased for $1.6 million since September 30, 2024.
• Portfolio Effective Yield: 15.5% for the fourth quarter.
• Cash Position: Over $30 million as of the call date, expected to increase to nearly $70 million post-transactions.
• MOD3 Pharma Revenue: $3.6 million for 2024, tripling from $1.2 million in 2023.
• GAAP Pretax Net Income: $8.6 million or $0.70 per diluted share for the fourth quarter.
• Fourth-Quarter Net Income: $5.9 million after income tax expense of $2.7 million.
• GAAP Book Value Per Share: $23.45 as of December 31, 2024, a 5% increase from the previous year.
• Operating Expenses: $6.6 million for the fourth quarter, down from $6.8 million in the previous year.
• MOD3 Operating Expenses: $1.6 million for the fourth quarter, down from $1.8 million in the previous year.
• Finance Receivables Segment Operating Expenses: $5.3 million for the fourth quarter, down from $5.6 million in the previous year.
• Share Repurchase Program: 50,000 shares repurchased for $800,000 during the quarter.

• Warning! GuruFocus has detected 4 Warning Signs with SWKH.

Release Date: March 20, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• SWK Holdings Corp (NASDAQ:SWKH) reported a solid financial performance with $8.2 million of finance segment net income for the fourth quarter of 2024.
• The company deployed $44 million into yielding finance receivables to life science companies, indicating strong investment activity.
• Non-GAAP tangible financing book value per share increased by 8% year over year to $21.15.
• SWK Holdings Corp (NASDAQ:SWKH) successfully repurchased approximately 100,000 shares for $1.6 million, reflecting confidence in its valuation.
• The company announced the signing of a transaction to sell its remaining performing royalty portfolio for $34 million, expected to close soon, enhancing liquidity.

Negative Points

• SWK Holdings Corp (NASDAQ:SWKH) had $13.8 million of gross finance receivables on non-accrual as of December 31, 2024, indicating some credit quality issues.
• The finance receivables segment revenue increase was partially offset by $900,000 due to two investments entering non-accrual status.
• Operating expenses remained high at $6.6 million during the fourth quarter of 2024, though slightly decreased from the previous year.
• The company is transitioning its MOD3 segment to held-for-sale status, which may indicate strategic challenges or a shift in focus.
• Despite positive financial metrics, the company's shares are trading at a 20% discount to book value, suggesting market skepticism or undervaluation.

Q & A Highlights

Q: When considering a dividend, are you planning for an ongoing dividend or a special dividend to return some of the cash to shareholders? A: Jody Staggs, President and CEO, stated that the Board is considering options and anticipates initially a one-time special dividend. There might be additional special dividends in the future, but a recurring dividend is not anticipated at this time.

Q: What is the status of the current share buyback program, and will the Board consider renewing or increasing it? A: Jody Staggs explained that there is still room in the buyback program, and they remain active repurchasers of shares, especially with shares trading at a 20% discount. The program is expected to expire around May 15, and the Board views the buyback as an attractive use of capital, likely considering reauthorization for another year.

Q: Can you provide an update on the recent workouts, such as Biolase? A: Jody Staggs expressed satisfaction with the progress on workouts, including Biolase, and emphasized the company's efforts in cleaning up and improving the portfolio.

Q: What is the expected impact of the sale of the remaining performing royalty portfolio and the closeout of the FX hedge on cash reserves? A: Jody Staggs mentioned that the sale and hedge closeout will add an additional $39 million of cash to the balance sheet, bringing gross cash to nearly $70 million, and a dividend is anticipated upon closing the final royalty transaction.

Q: How is the MOD3 CDMO division performing, and what are the expectations for 2025? A: Jody Staggs noted that MOD3 Pharma, the rebranded CDMO division, tripled its revenue in 2024 to $3.6 million and is expected to continue growing in 2025, with a focus on achieving unsubsidized profitability by year-end.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.